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Kick-Out Option
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A knock-out option with the outstrike in-the-money. In-the-money barrier options have been blamed for some incidents of instability in currency markets. A dealer can avoid exposure to the instability if he can sell kick-in and kick-out options of the same type (call or put) with a common barrier. Hedging costs and risks may be greatly reduced if one option kicks in when the other kicks out. See Out Option, Kick-In Option.
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